Dive brief:
- US contractors to lose $30 billion to $40 billion by 2022 due to labor inefficiencies, and it seems to be getting worse, according to a new survey by FMI Corp.
- Almost half of respondents (45%) said they saw a decline in labor productivity in their workplaces in the past 12 to 18 months, compared to 23% who claimed improvements. The report described labor as the “biggest, riskiest, but most controllable variable cost” of construction and said these issues could worsen in the coming months.
- The report emphasizes construction’s already thin labor margins, and respondents estimated that the industry could have saved $25 billion in wasted funds with improved management practices.
Diving knowledge:
FMI, a Raleigh, North Carolina-based investment banking and consulting firm with clients in the built environment, said high-performing companies can increase productivity through intensive planning, budgeting and reliable documentation and the acceptance of all interested parties. These are also many of the principles advocated by lean construction methods.
In addition to wasted money on productivity, construction faces a well-documented situation shortage of workers compared to demand. Estimates place the sector’s current need at half a million.
“We are all affected by the labor shortage, there is no solution. The solution will be how to do more with less,” said Keyan Zandy, CEO of Dallas-area contractor Skiles Group. “Simply put, you need the right people working together, sharing ideas and solutions and making strategic decisions.” .
Zandy, a advocate of lean constructionhe said the real solution lies in people and “how they work together,” collaborating and connecting early in the preconstruction process.
Lean practices are common on projects for many large general contractors, said Les Hiscoe, president and CEO of Boston-based Shawmut Design and Construction, who said he has found many of the inefficiencies in the life cycle of project during deliveries.
“If an electrician says it’s going to be done in five days, it could actually be done in four, but they round it up to five to give themselves a little cushion. Then maybe the drywall says, ‘Well, me too I’ll bring five.’ But they can have one for a day that’s not quite ready,” Hiscoe said. “So if you’re taking two out of five days because they’re not completely necessary, that’s 40% wasted.”
Schedule, trust, flow
Hiscoe said Shawmut schedules early with subcontractors and stakeholders, builds trust with them and holds each team accountable for delivering on time, which can make a big difference. From project to project, it adds up, he said.
Charlie Murphy, senior vice president and manager of Turner Construction, said the contractor often turns to crew leaders for their expertise to create “flow” on the job site, working efficiently from one area to another to allow that more work is done at once.
Murphy attributed the rise in labor inefficiencies, in part, to an increase in infrastructure and manufacturing projects, which often come to market more quickly.
“When you don’t have good planning time, those impacts show up downstream,” he said. “We can’t give up on this upstream planning, it’s such an important part of the project.”
When asked to distill the best method to reduce inefficiencies and minimize wasted labor costs, Murphy said, “Slow down to speed up. Plan. Get crew leaders involved. And create an environment where workers are respected “.
